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Feb. 13, 2006 – New Global owners get back to basics

February 13, 2006

New Global owners get back to basics
CINCINNATI — Just a month into their new role as Global Motorsport Group majority owners, Cerberus Capital Management officials had an upbeat message for vendors and dealers at the annual V-Twin Expo: things are improving.
The company’s fill rate has improved more than 15 percent and inventory has been pouring in since Jan. 9, when Cerberus became majority owners, Cerberus’ Bryan Rishforth, vice chairman, said on Feb. 5 in an interview with Powersports Business.
Cerberus’ move is the latest in a string of ownership and debt reduction plans that the Morgan Hills, Calif.-based parent company of Custom Chrome and Motorcycle Stuff products has undergone in the past four years.
Cerberus, a private investment firm, now has control of Global’s board of directors, controlling five of the six seats.
“Obviously we respect them as a partner, as a shareholder,” Jeff Fenton, Global’s new chairman, said. “But we decide when something is going to get done.”
Besides Fenton and Rishforth, Cerberus brought in another seven or eight personnel who will work in different phases of Global, from sales to product development to supply management.
“We have a bunch of folks who ride,” Fenton said of Cerberus personnel. “So we have people who have passion for the industry and for our products.”
But he also stressed Cerberus is not an expert in the powersports industry and will be relying on some key Global executives, including Motorcycle Stuff’s Tim Dodd, to improve the company.
“We’re not cocky,” Fenton said. “We’re turning the keys over to folks who really know the business.”
At the same time, Fenton and Rishforth believe their experiences, which have been in the industrial and capital side of business, and Cerberus’ can be beneficial.
“Our objective is to bring the experience, the knowledge, the best practices, even resources from those past experiences to bear if they can be utilized here,” Rishforth said.
Fenton and Rishforth also oversee other Cerberus businesses, serving on other companies’ board of directors.
“Even though we’re not in Morgan Hill everyday, it doesn’t matter,” said Fenton, who is responsible for five other companies. “We know how to stay connected.”
At Cincinnati, the two were trying to connect with dealers and vendors, parties that have at times suffered as Global has gone through three other refinancings and one other ownership change in the past four years.
“There’s some areas where we have to earn trust back,” Rishforth said.
When the change of ownership occurred, the company’s fill rate was below 50 percent and Global had stopped issuing purchase orders, bringing inventory buildup to a standstill. Some four weeks later, Rishforth said the company’s fill rate has climbed to 66 percent and the company expects $3-4 million in inventory to be flowing in over the next two weeks.
“That’s only going to continue to accelerate,” he said.
The company has not announced any major changes in personnel or infrastructure.
Fenton said the focus is simply to improve fill rates, get vendors back online and build communication with Global’s consumers.
“It’s not complicated,”?he said. “It’s not fancy.”
But will it be enough to lure dealers and vendors back who have witnessed Global’s struggles in the recent past?
One difference in this ownership change, Rishforth said, is where the new money is going.
“The cash we put into the business is going to buy product for our customers, which is the No. 1 driver in recovering this business. We’re already seeing the positive effects of that,” he said. “There’s been other refinancings and those paid down debt and kind of went into different areas of business that didn’t necessarily have a high correlation to fill rates and customer satisfaction.”
Cerberus holdings include a 49% stake in Japanese bank Aozora, U.S. tech firm SSA Global Technologies, and cable operator Galaxy Cable, according to biz.yahoo.com. The Web site also said the company “often injects capital into retail ventures.” One venture that did not work was now extinct music retailer Wherehouse Entertainment.
More recently, a Cerberus-led investment group was part of a consortium that purchased Albertsons, a supermarket chain. psb